Some Issues Associated with the Divisionalized Form

We begin our discussion of the issues associated with this configuration by enumerating some of the advantages traditionally claimed for the Division- alized Form over the more integrated functional forms. Then, from soci- ety’s perspective, we suggest that the Divisionalized Form should logically be compared with another alternative, that of the divisions constituted as

The Adhocracy: Description of the Basic Structure

1. The design parameters In Adhocracy, we have a fifth distinct configuration: highly organic struc- ture, with little formalization of behavior; high horizontal job specializa- tion based on formal training; a tendency to group the specialists in functional units for housekeeping purposes but to deploy them in small, market-based project teams to do their

Conditions of the Adhocracy

1. Basic environment The conditions of the environment are the most important ones for this configuration; specifically, the Adhocracy is clearly positioned in an en- vironment that is both dynamic and complex. According to Hypotheses 9 and 10, a dynamic environment calls for organic structure and a complex one calls for decentralized structure. And

Some Issues Associated with Adhocracy

There has been little exploration of the issues associated with Adhocracy, the newest of the five configurations. Simple Structure is so old that its advantages and disadvantages are by now taken for granted. The issues associated with Machine Bureaucracy have been discussed at great length in the literature, especially those concerning alienation and conflict.

The Five Configurations of Organization as One System

Do any of these configurations really exist? This is a strange question to raise after so many pages of discussion, filled with illustrations. But it is worth asking, in order to draw a tighter line between the five configura- tions and the reality they purport to describe. In one sense, the configurations do not

To Six Configurations of Organization . . and Beyond

Is there a sixth configuration? Well, the rainbow still has only five colors.1 But the planets turned out to number more than five. We even seem to be on the verge of recognizing that sixth sense. So why not a sixth configura- tion? As long, of course, as it maintains the harmony of our

Foundations of the Knowledge-based theory of the firm

The foundation for any theory of the firm is a set of initial premises which form the basis for the logical development of propositions concerning the structure, behavior, performance and, indeed, the very existence of firms. Developing a knowledge-based theory of the firm raises the issue: What is knowledge? Since this question has intrigued

Knowledge-based theory: The existence of the firm

The above precepts establish a rationale for the existence of firms. Following Demsetz (1991: 171- 175), the existence of the firm represents a response to a fundamental asymmetry in the economics of knowledge: knowledge acquisition requires greater specialization than is needed for its utilization. Hence, production requires the coordinated efforts of individual specialists who

Knowledge-based theory: Coordination within the firm

The assumptions that there are gains from special-ization in knowledge acquisition and storage, and that production requires the input of a wide range of specialized knowledge, restates a premise which, either explicitly or implicitly, is fundamental to all theories of the firm. Without benefits from specialization there is no need for organizations comprising multiple

Knowledge-based theory of the firm: Organizational structure

The above assumptions about knowledge and the conceptualization of the firm as a knowledge- integrating institution have two main implications for the internal structure of the firm: first, the role of hierarchy; second, the location of decision making. 1. Implications for hierarchy The fundamental organizational problem is achieving purposeful, coordinated action from organizations comprising

Knowledge-based theory: Boundaries of the firm

If firms exist to integrate the specialized knowledge possessed by a number of individuals because such integration cannot be performed efficiently across markets, what determines the boundaries of the firm? In the light of the initial assumptions about knowledge, the vertical and horizontal boundaries may be analyzed in terms of relative efficiency of knowledge

Capability and Knowledge Formation as Problem Solving

Problem solving and knowledge formation are at the center of our theory. The manager’s fundamental knowledge-based objective is to sustain above-normal profits by continually discovering new knowledge or new solutions that form from unique combinations of existing knowledge. Nelson and Winter (1982) explicitly define a firm’s knowledge (or capability) as the “inputoutput combinations achievable

Governance Choices and Knowledge Formation Hazards

If differing problems demand differing search processes, then the manager’s task is to identify relevant knowledge sets and to craft a mechanism of governance that supports or enhances the method of search appropriate for the chosen problem. For simple, decomposable problems involving limited interaction among design choices, directional search based on feedback is desired.

Governance Alternatives for Mitigating Knowledge-Formation Hazards

To this point we have argued that problems differ in complexity and in optimal forms of solution search. Complex problems require solution search that involves extensive knowledge transfer, which is discouraged by knowledge-exchange hazards. Efficiency thus dictates the selection of governance forms, which support the appropriate level of knowledge transfer. At the same time,

Discriminating Alignment

Our theory suggests an alignment between the search needs of problems and the search costs and performance of governance alternatives. We summarize the proposed alignment in Table 3 and Figure 1. Table 3 summa­rizes the set of relationships from problem type to gov­ernance choice. Figure 1 compares the stylized costs we described above for

Rethinking the Corporation in The Core Competence Perspetive

Once, the diversified corporation could simply point its business units at particular end prod- uct markets and admonish them to become world leaders. But with market boundaries changing ever more quickly, targets are elu- sive and capture is at best temporary. A few companies have proven themselves adept at inventing new markets, quickly entering

The Core Competence: Roots of Competitive Advantage of the Corporation

The distinction we observed in the way NEC and GTE conceived of themselves—a portfo- lio of competencies versus a portfolio of busi- nesses—was repeated across many industries. From 1980 to 1988, Canon grew by 264%, Honda by 200%. Compare that with Xerox and Chrysler. And if Western managers were once anxious about the low

How Not to Think of Core Competence of the Corporation

Since companies are in a race to build the competencies that determine global leader- ship, successful companies have stopped imagining themselves as bundles of businesses making products. Canon, Honda, Casio, or NEC may seem to preside over portfolios of businesses unrelated in terms of customers, distribution channels, and merchandising strategy. Indeed, they have portfolios

Identifying Core Competencies— And Losing Them in Firm

At least three tests can be applied to identify core competencies in a company. First, a core competence provides potential access to a wide variety of markets. Competence in dis- play systems, for example, enables a company to participate in such diverse businesses as cal- culators, miniature TV sets, monitors for lap- top computers,

From Core Competencies to Core Products of the Firm

The tangible link between identified core competencies and end products is what we call the core products—the physical embodi- ments of one or more core competencies. Honda’s engines, for example, are core prod- ucts, linchpins between design and develop- ment skills that ultimately lead to a prolifera- tion of end products. Core products are